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February 16, 2010
Cost of living and economic recovery
Here is a simple set of figures to give my reasoning as to why the economy will not recover anytime soon. I invite all readers of this article to compare household costs and see how much hard earned money goes to just living expenses.
Average household income 2009: $50,233 (US Census Bureau)
The numbers below are mine; everyone else's will be different based on local and situation. Rounded amounts to next dollar and approximated some numbers. As any home owner knows, upkeep can shoot well above what I placed here. Water heaters, A/C units, roofs and so forth all give out and are costly.
Natural Gas: 80 (Much more in winter months.)
Daycare: 600 (One full time, one before and after school. Makes me wonder if both parents
working is even worth it.)
Fuel: 480 (Two cars)
Mortgage: 808 (w/ Property tax and insurance in escrow.)
Electric: 80 (More in summer months.)
Auto Insurance: 118
Monthly Total x12
= 33,732 annually, just necessities.
$16,501 Left over.
Cable w/internet: $121 (We cut this bill out. A want, not need.)
Home Upkeep: 100 (Minor repairs, monthly maintenance etc.)
Clothes: 300 (approx.)
Entertainment: 160 (Movie family of 4 once a week, an example. Usually did nothing but would have liked to.)
Vehicle Upkeep: 100 (approx.)
Phone: 120 (We have a $99.99 plan, but taxes and fees add on cost.)
Monthly Total x12
$5689. Remaining from the $16, 501 above.
Health Insurance: - 5400 Per year @$450 per month.
$289.00 Left from the Average income of $50,233.00
Oh, and so sorry, that last bit of money needs to go to vehicle registration and emissions testing.
It should also be noted, no savings listed. Save what? There is nothing left.
Now of course living in an area with a steady unemployment rate around 10% for several months, and many jobs paying the minimum wage or just over, it is safe to say my household did not reach the average of $50k+ this year.
Until households have more disposable monies to spend on more than the basics and survival, purchasing of goods and services will continue to fall short. As taxpayers are receiving Federal tax refunds, there will be a spike in spending, a completely artificial spike that will be short lived.
If the lawmakers in D.C. were able to do something as simple as a little addition and subtraction our legislators may begin to grasp a better understanding as to what is going on in America, that is, if Washington's denizens really cared about the average America citizen and not just pushing political agendas that will create more taxation and government spending. Since a good number of all the items listed above are higher in cost simply from taxation and legislation in various forms.
Many of America's troubles can be solved by the simplest of evaluations and adjustments to the heavy taxation in our daily lives. However, with the government having its fingers in our energy, utility, and communications pies, Washington may not be able to examine any fixes because of so many conflicts of interest. Conserve on any of these several resources like the government says we should from one side of its face, well, the results are tax revenue shortages and are quickly by followed by a raise in taxation and cuts into services such as police, fire departments and schools. No win for the consumer from any angle.
Not that conservation is something that should not be done anyway; but then to get punished at the wallet for it by a government that seems to place no value whatsoever in living within its own means or foresight to anticipate that less consumption means less tax revenue is a bit ridiculous. Anyone that has ever sold a product or service realizes that basic concept, less sales equals less revenue. Pretty simple.
Time and again in financial history around the globe and within several nations, low taxes create higher government tax receipts. Heavy handed taxation results in destruction of the governments tax flow along with the economy that supports how the government gets money in the first place. Us, they take money from us. What Washington does not comprehend is that there is no longer any more money to take.
So, until I and many other Americans have some extra money to spend, this is where we will stay. As the fist of taxation tightens so will Americans grasping each and every penny.